Atlantic Richfield acknowledged Friday that it is looking for a buyer for Arco Solar Inc., the subsidiary that Arco built into the world's leading producer of photovoltaic cells after buying a small solar firm amid much hoopla in 1977.

Describing the growth of the solar market as unacceptably slow because energy prices haven't climbed nearly as high as some had projected in the 1970s, Arco said it is discussing the sale of all or part of Arco Solar with "a number of companies."

Among the potential buyers is James Caldwell, the former president of Arco Solar, who confirmed Friday that he took a leave of absence from the firm in mid-November to spend his time trying to line up investors.

Arco officials and Caldwell declined to discuss details of any such negotiations or other suitors. But they apparently include foreign interests, possibly Japanese. Caldwell said he believed a sale will be concluded "relatively soon."

Arco becomes only the latest of several oil companies to enter and depart the solar business. Exxon, Shell and Sohio have all dabbled in the potential for harnessing the sun's energy. British Petroleum, which bought Sohio, maintains an active solar business in England.

Though there was skepticism in some quarters about the motives of oil companies getting into renewable forms of energy that could eventually compete with oil and gas, Arco dispelled such doubts and became a hero of sorts in the renewable-energy community.

"There's always been the notion among some people that oil companies would buy up the technology and then sit on it," said Robert Steele, analyst at the solar marketing and research firm Strategies Unlimited in Mountain View, Calif.

"But you certainly can't accuse Arco of sitting on the technology."

A tiny part of the $17-billion oil, gas and chemical company--the subsidiary rated one brief paragraph in the company's latest annual report--Arco Solar benefited from the parent firm's infusion of cash and came to dominate what remains a small business worldwide.

In fact, Arco's proposed sale of the $30-million-a-year business--particularly the possible sale to foreign interests--has alarmed some advocates of renewable energy.

"It's a technology that's going to go the way of the VCR," said Edwin Rothschild, director of the Citizen-Labor Energy Coalition in Washington. "It's outrageous that they would think of selling it to the Japanese, of all people."

Despite Arco's leadership, the nation is already a net importer of solar thermal systems, a recent study by the General Accounting Office said. The GAO blamed cutbacks in federal funding of research and development for eroding U.S. leadership in photovoltaics technology.

Japan is strong in solar technology, both for industrial and consumer use, and boasts perhaps half a dozen companies that might want to buy Arco Solar, Steele said. Among them is Arco Solar's joint-venture partner Showa Shell.

Caldwell argued that the sale will be good for both Arco and Arco Solar because the oil company management was unable to devote the attention that the solar unit needs.

"In the final analysis, I believe this is going to prove to be the correct decision, from the standpoint of Arco and Arco Solar," Caldwell said.

"I don't believe the photovoltaic industry in this country is in jeopardy," he added.

Arco Solar has never turned a profit because of the high proportion of research-and-development outlays to sales, Caldwell said. But he said the business "can be made profitable in the short term." Up to 40% of revenues are plowed back into R & D.